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Regulation and Compliance > Federal Regulation > FINRA

FINRA Impersonators Are Scamming Investors, Regulator Warns

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The Financial Industry Regulatory Authority is warning investors that con artists are posing as regulators to conduct investment scams.

FINRA released an Investor Alert Friday stating that fraudsters used FINRA’s name and logo in correspondence — including a fake signature from FINRA President and Chief Executive Officer Robert W. Cook — to create the false impression that FINRA provided guarantees related to an investment opportunity that was, in fact, an advance-fee scam.

Gerri Walsh, FINRA’s senior vice president for Investor Education, stated that FINRA “does not guarantee investments, and our officers play no role in facilitating investment opportunities. We want people to know that and to understand how they can verify who the real FINRA is.”

One scam being conducted is the “common advance-fee scam,” which the broker-dealer self-regulator says “involves enticing investors into sending money to cover administrative or regulatory charges associated with a buyback of shares of stock that are currently virtually worthless or underperforming.”

Once investors send the money, “they never see it again, nor any of the money promised from the stock buyback. Sometimes, the con artist will ask for additional money or simply disappear,” FINRA states.

One investors informed FINRA of a “an official-looking letter, purportedly from FINRA’s CEO, touting a guarantee.”

The letter, however, “contained numerous telltale signs of fraud, including the use of quasi-legal language throughout the document, repeated use of ‘guarantee,’” as well as incorrectly identifying the regulator as FinRa and using incorrect titles.

Click to enlarge. Source: FINRA

Another fraud involved email pitches that purported to originate from Cook portrayed FINRA as a “recognized financial manager of the IMF,” notifying potential victims that “approval has been granted for the release and payment of your outstanding inheritance fund.”

The scheme further required the victim to fly to another country — outside of the jurisdiction of any U.S. regulator or law enforcement officer — to claim the “inheritance.” In these imposter emails, the victim is asked to provide personal information, including a copy of their passport, which is a common tactic used in phishing scams, according to FINRA.

“If you’re unsure whether an investment solicitation is legitimate, do your own independent search for the official number for the government agency, office or employee and call to confirm its authenticity,” Walsh advised.

FINRA pointed investors to its Scam Meter tool as well as its Risk Meter, which determines if an investor is particularly vulnerable to investment fraud.


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